As commerce has become more globalized, our supply chains have become increasingly complex. The private sector has honed the skill of finding resources at the cheapest price, processing them where it’s most practical, and selling them where people will pay for them.
But this linear model is problematic. We extract raw materials from the Earth, ship them across the world on polluting cargo ships, and sell the finished product to consumers, who then throw it into the trash when they’re done with it.
Our supply chains are overstretching the planet’s resources, which is driving deforestation, biodiversity loss, the climate crisis, human rights violations and other global challenges.
Around the world, governments, companies, communities and consumers are calling for accountability. We want to know whether this carton of soy milk contributed to tearing down the Amazon rainforest, and if the beans ground for that cup of coffee were picked by a worker who was paid a living wage.
There are other reasons for companies to want to trace supply chains back to the source, too. During the COVID-19 pandemic, international shipping was severely disrupted, and many businesses lost a lot of money as a result.
Those with sound traceability strategies – that is, systems to track their products from production to consumption – could work out which ships were carrying their resources or products and respond more quickly.
Traceability can also help with food safety, as it means that when unsafe food is found within a supply chain, market actors and regulators can quickly work out where it comes from and where else it has gone, and mitigate the consequences.
New technologies like blockchain can be important tools to straighten out the environmental and social pedigrees of products with convoluted supply chains. But despite their promise, they’re no silver bullet, say scientists.
A decade ago, traceability was something of a statement for sustainability-focused brands. As an example, in 2008, New Zealand merino knitwear company Icebreaker launched its ‘baacode,’ which allowed consumers to trace their garment back to a single sheep.
Now, though, traceability is becoming a necessity for large swathes of the private sector. A 2021 survey of 150 senior supply chain leaders found that 68 percent of executives viewed traceability as “very or extremely important.”
Tighter regulatory requirements have a part to play, as well as growing customer concerns: according to Future Market Insights research, three-quarters of consumers surveyed in 2019 said they would switch to a brand that offers in-depth product information – up from just 39 percent in 2016.
But while it might seem superficially simple for a company to trace its product’s ingredients, many find the process painfully complex. “Traceability adds a new element of complexity: the need to collaborate closely with a vast ecosystem of value chain partners,” says this brief from global management consulting firm Bain & Company.
Take the salmon industry, for instance. It sounds relatively straightforward to track a salmon steak from, say, a Norwegian fjord to a British supermarket – and to check out the farm’s sustainability chops along the way.
But farmed fish supply chains also take into account what the fish are fed, and that’s where things can get blurry. When purchasing fishmeal and fish oil (FMFO) to feed their salmon, many farms rely on third-party certification bodies like the Responsible Supply standard.
But in 2019, an investigation by the Changing Markets Foundation mapped some of those supply chains back to their sources. They found that many salmon products sold in European supermarkets like Sainsbury’s, Aldi and Tesco – and bearing environmental credentials that included Responsible Supply certification – had likely been fed with FMFO obtained through “highly unsustainable” fishing practices in India, Vietnam, and the Gambia.
This provenance, they found, had been obscured by practices like unauthorized transhipment (transferring catch from one vessel to another), underreporting of catches destined for fishmeal factories, and relabeling and black market export to other fishmeal-producing countries such as Chile and China.
In contexts like this, new technologies like blockchain can be extremely helpful. Perhaps best known as the driving force behind cryptocurrencies, a blockchain is a kind of digital database or ledger that is distributed among the nodes of a network, with growing lists of records – ‘blocks’ – that are linked together in a ‘chain’.
What’s special about it is that each block of information is secure and can’t be corrupted, which allows for decentralized surveillance and control of the system, rather than requiring trust in a third-party certification body, for instance.
“The seafood industry faces several challenges,” said Trond Hendriksen, a group leader at Norwegian technology firm Atea, in a video about his company’s efforts in this area.
“One of them is a reputational challenge about how fish is farmed. Then, they have other challenges as well in terms of how fish is transported from processing plants in Norway to the markets in the world. We think that quite a lot of these challenges can be solved by handling the information differently than they do today.”
“Trust is something that has come up in recent years. Where we have consumers going to the store wanting to buy seafood, you’d like to know what it’s been fed,” said Vidar Gundersen, global sustainability director at Biomar, in the same video. “So we require more and more information, but there’s been no place for us to to get it up to now.
To that end, Atea has been collaborating with IBM’s blockchain-based platform Food Trust, and the Norwegian Seafood Association, to build a network called the Norwegian Seafood Trust, which is based on blockchain technology and works with some of the biggest fish farming companies in the world.
“We’re collecting large amounts of data on fish welfare, water quality, genetics, feed, processing, and distribution – and the transparency and availability of this data is something that we haven’t seen before,” said Hendriksen.
The salmon industry isn’t alone. From diamonds to pharmaceuticals to beauty products, many industries are adopting blockchain-based platforms to trace their supply chains in accurate and cost-effective ways. In the lucrative, complex, and controversial palm oil industry, concerns about deforestation have prompted numerous efforts in this arena.
“Part of this challenge with traceability is figuring out who smallholders are selling to: dealers, collection centres, or straight to the millers,” said Michael Brady, a principal scientist at the Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF), which has carried out several applied research projects on the topic in Indonesia and Malaysia.
“The human resources required to address this issue are immense – thus the interest in adapting technologies such as blockchain to meet traceability goals.”
And blockchain isn’t the only new tool in the game. Other companies are developing their own digital traceability systems to fit their particular contexts. Leading ethical chocolate brand Tony’s Chocolonely has created its own software called Beantracker, which uses another traceability system called ChainPoint.
Through this system, they GPS-map each farm that provides beans to the company and ensure these beans travel through their own segregated supply chain. All actors within the chain can use a monitoring tool to see where the beans are at any moment in time.
Artificial intelligence (AI) and the internet of things (IoT) are also being used to make steps forward in food safety and efficiency within supply chains. IoT devices can be attached to storage containers, raw materials, or products, which can then be picked up by GPS satellites and used to track their movement, as well as things like temperature, humidity, light levels, and handling. AI analysis can then use this information to assess whether a particular shipment or product is at risk of spoilage.
But as tempting as it can be to pin all our hopes on new technological innovations, making supply chains truly sustainable is going to take more than signing up for the latest in traceability tech. We might also do well to look carefully at why so many of our supply chains are so convoluted – and rethink business models with livelihoods and sustainability in mind.
Another ethical chocolate company, Beyond Good, has taken that approach. A QR code on the inside of the wrapper allows buyers to ‘see into’ its supply chain and ‘meet’ all the Madagascan farmers who provide the beans.
But that doesn’t require any fancy systems: the company has instead opted to build its own supply chain and to keep it as simple and free of ‘middlemen’ as possible. It buys directly from farmers and has built its own factory to fabricate the bars in Madagascar, rather than shipping beans to Europe for processing, like most other chocolate brands do.
Perhaps this kind of supply chain re-evaluation is the next step towards sustainability for many products: once we know where they come from, we can begin to imagine fairer, greener, and more efficient pathways from field to factory to first bite.
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